ARTICLE XII

NATIONAL ECONOMY AND

PATRIMONY

SECTION 1:The goals of the national are more equitable distribution of opportunities, income and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising quality of life foe all, especially the underprivileged.

Concept of national economy and patrimony.1. The national economy refers to the entire structure of

economic life in a country. It encompasses all the activities relating to or concerned with the production, distribution and consumption of goods and services and what are called “factors of production”.

2. The national patrimony refers primarily to the natural resources of the country which under the Constitution include “all lands of the public domain, waters, minerals, coal, petroleum and other mineral oils, all forces of potential energy, fisheries, forests, or timber, wildlife, flora, fauna,” and “all marine wealth in its archipelagic waters, territorial sea and exclusive maritime zone,” and “our cultural heritage”.

Three-folds goals of the national economy

1. Equity a more equitable distribution of opportunities, income and wealth. One important aid in promoting equity is the control of monopoly and the prevention of unfair competition.

2. Growth sustained increase in the amount of goods and services produced by the nation for the benefit of the people. Economic growth is conventionally measured by the increase of the gross domestic product(GDP) which is the estimated total value of all the goods and services produced by the economy.

3. Productivity an expanding productivity as the key to raising the quality of life for all especially the unprivileged. Productivity is the ability, capacity or degree of effectiveness for making greater output out of every unit of input employed.

Strategies to accomplish goals.

In the pursuit of the goals of the national economy, the Constitution mandates the State in Section 19 of article II and in Section 1 above, aside from other provisions.1. to develop a self reliant and independent

national economy effectively controlled by Filipinos.

2. To promote industrialization and full employment.

3. to protect Filipino enterprises against unfair foreign competition and trade practices.

4. To give all economic sectors and regions of the country optimum opportunity to develop; and

5. To encourage private enterprises, including corporations, cooperatives and similar collective organizations to broaden the base of their ownership.

Guidelines in the development of the national economy

1. Self-reliant economy. In providing for economic self-reliance, the intent is not to pursue a policy of economic seclusion from the international economic community.

Self reliance simply means that the Philippines must have the ability to cope with its economic problems or to implement its development programs by the use of its own resources with a minimum of dependence from foreign governments, inventors or financing institutions for loans and investments.

2. Independent economy. The national economy must be free from undue foreign control or intervention.

3. Economy effectively controlled by Filipinos. “The principal responsibility for development belongs to Filipino citizens. They must be the principal determinants as well as the chief beneficiaries of economic progress”

Promotion of Industrialization and Full Employment.

1. The importance and urgency in the Philippines. For the developing country like Philippines, with growth and an a large population growth and excess labor supply, there is an inherent advantage in adopting a development strategy that promotes industrialization and full employment.

An important aspect of industrialization is that it generates a high level of employment.

(2) Based on sound agricultural development and agrarian reform.

agriculture is not the only main source of livelihood.

agricultural development is important to a low-income country like the Philippines with a large agricultural base.

agrarian reform takes on a central position as component of policies for raising agricultural productivity.

agriculture as a source of export earnings even assists industry in providing its foreign exchange needs.

all the "tiger economies" of East Asia have anchored their industrialization on agricultural modernization.

(3) Balance between agricultural development and industrialization. The primary shall be in agriculture and as agricultural growth is being achieved, the emphasis shall increasingly shift to industrial development.(4) Adaptation of a flexible economic policy. Agricultural development must be pursued not at the expense of industrialization but on a complementary basis to insure the growth of both.

Protection of Filipino enterprises against unfair foreign competition and trade practices.*protection guaranteed is not against foreign competition but unfair foreign trade practices.1. Permanent protection not contemplated. But

protection is not intended as a permanent support for "non-infant" enterprises.a.It perpetuates the "colonial" of Filipinos to prefer

foreign goods and not local products.b.Having attained greater efficiency, the price of its

products should fall and, hence, benefit consumers.c.It is also prejudicial to some industries that breed

imported raw materials for processing of products for domestic sale or export.

d.Finally, the constitution rejects the principle of absolute protectionism also it would invite retaliatory measures by other countries.

2. When protection justified. The Philippine government has the exclusive right to define what shall constitute unfair competition or trade practices justifying protection of Filipino enterprises.

SECTION 2:

All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wild life, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resource shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full controlling and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by the citizen.

The constitution declares that all lands of the public domain and all other natural resources of the Philippines "are owned by the State." (par.1.) In furtherance the constitutional policy on natural resources, Section 2 prohibits the transfer or conveyance to aliens of private lands save in hereditary succession. (Sect. 7, infra.)

1. Our constitution adopts the Regalian Doctrine with respect to the natural resources of the country. This doctrine holds that all minerals, coal, etc. found either in public lands or in private lands belong to the State.

2. Under the doctrine, all lands of the public domain belong to the State and lands not otherwise appearing time be clearly within private ownership are presumed to belong to the State. Unless public land is shown to have been reclassified as alienable or disposable, and subsequently alienated by the State, it remains part of the public domain. Occupation or possession thereof by a person in the concept of the owner, no matter how long cannot ripen in ownership.

Objectives of policy on natural resources.The adoption of the Regalian Theory of ownership over the national resources of the country was deemed necessary:1. To ensure their conservation of national defense, helping

prevent the extension into the country of the foreign control through peaceful economic penetration; and

2. To prevent making the Philippines a source of international conflicts with the consequent danger to its internal security and independence.

Alienation of agricultural lands of through public domain.The State is not authorized to alienate, not even to Filipino citizens, the natural resources of the country. Only agricultural lands of the public domain may be alienated (Sects. 2, 3.) and only to Filipino citizens. Alienation is allowed because other provisions insure their conservation and development by Filipino citizens (see Secs. 3, 5, 7, 8, 10.) so that such lands may be utilized and developed for the benefit of Filipinos.

Exploration development and utilization of natural resources.1. Former scheme. - before, the exploration, etc. of any

of the natural resources may be granted by the government by license, concession or lease to citizens of the Philippines or to corporations or associations at least 60% of the capital of which is owned by such citizens. The role of the government was merely to give the permission.

2. More active role by through State. - Section 2 now requires that the State should take a more active role in the exploration, development and utilization of natural resources.

3. Options available to the State. - The State (a) may undertake such activities directly, or (b) it may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or corporations or associations at least 60% of whose capital is owned by such citizens (par. 1.), or (c) it may enter into agreements with foreign-owned corporations for large-scale exploration, etc. (par. 4) The old system whereby the natural resources are explored, etc., by license or concession without any participation of the State is no longer allowed.

Period of agreement for exploration, etc., of natural resources.

1. The agreement for the exploration, development, or utilization of any of the natural resources may be for a period not exceeding twenty-five (25) years, renewable for not more than twenty-five (25) years. (par. 1). This period is believed long enough for capital, local and foreign, to realize profit on investments in natural resources.

2. With respect to water rights for irrigation, water supply, fisheries or industrial uses, the measure and limit of the grant is their beneficial use. (Ibid.) The period of twenty-five (25) years is considered not a satisfactory criterion for these resources as it might be too short in some cases and too long in others.

Protection of the marine wealth.The state has the obligation:1. To protect the nation's marine wealth in its archipelagic waters,

territorial sea, and exclusive economic zone (see Art. 1.); and2. To reserve its use and enjoyment exclusively to Filipino citizens.

Technical or financial assistance agreements with foreign-owned corporations.*This refers to the third major scheme.*The Constitution imposes the ff. conditions on such agreements entered into by the President:3. Three agreement must involve only either technical or financial

assistance;4. It must be for a large-scale for exploration, etc. of minerals,

petroleum and other mineral oils;5. It provisions must break according to the general terms and

conditions provided by Law, based on real contributions to the economic growth and general welfare of the country;

6. The President shall sequent notify congress of the Congress of the contract within 30 days from its execution; and

7. In such agreement, the State shall promote the development and use of local scientific and technical resources.

SECTION 3:

Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to w/c they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domains except by lease, for a period exceeding twenty-one years and not exceed one-thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares or acquire not more than twelve hectares thereof by purchase, homestead or grant..

Classifications of lands of the public domain. Agricultural – land devoted principally to the raising of crops such as rice, sugar, tobacco, coconut, etc., or for farming Forest or timber – land producing wood or able to produce wood or if agricultural crops on the same land will not bring the financial return that timber will or if the same land is needed for protection purposes; Mineral – Land in w/c minerals exist in sufficient quantity or quality to justify he necessary expenditures to be incurred in extracting and utilizing such minerals National parks – land maintained by the national government as a place of beauty or for public recreation, like the Rizal Park or forested land reserved from settlement and maintained in its natural state for public use (as by campers or hunters) or as wildlife refuge.

Taking into account the requirements of conservation, ecology and development and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held or leased and the conditions therefore.

Basis and rationale of classification 1. The classification of land (1973 Constitution)

a) Agriculturalb) Industrial / commercialc) Residentiald) Resettlemente) Mineralf) Timber of forestg) Grazing lands

 2. The rationale for the change is to limit the lands

of the public domain w/c may be alienated to public agricultural lands.

Determination of size of landholdings and conditions therefore. 

The constitutions authorizes Congress to determine by law the size of alienable lands of the public domains w/c any qualified individual, corporation or association may develop, hold or acquire or lease and the conditions therefor.

According to studies made 42% of the land area of the Philippines should be forest in order to maintain the proper ecological balance.

 Maximum size of landholdings • Individual – the maximum area of public agricultural

lands may be acquired by purchase, homestead or grant is 12 hectares (reduced from 24 hectares) and by lease, 500 hectares.

• Corporations and associations – the maximum area that may be leased 1,000 hectares. Lease period shall not exceed 25 years renewable

for not more than 25 years.

SECTION 4:

The Congress shall, as soon as possible, determine by law the specific limits of forest lands and national parks, marking clearly their boundaries on the ground. Thereafter, such forest lands and national parks shall be conserved and may not be increased nor diminished, except by law. The Congress shall provide, for such period as it may determine measures to prohibit logging in endangered forests and watershed areas.

Grant. Now a mode for acquisition of public landsGrant alienable and disposable public lands to qualified individual citizens; the recipient will not pay for the land, although he may be made to shoulder the cost of titling and surveying. (1973 constitution; 1984 plebiscite)  REASONS:1. It is timely step in making vast parcels of idle public lands

available to the less fortunate citizens and in boosting agricultural production in the country.

2. The land grant is designed to benefit only qualified farmers, landless agricultural workers, and other landless citizens

3. Only individuals w/ considerable resources have been able to acquire public lands, defeating the constitutional intent to benefit small settlers in the distributions of public lands to uninformed but deserving citizens w/in a relatively short period of time.

4. Gives social justice and renders public land distribution more honored in practice than in theory; it provides safeguard to prevent abuses and ensure that public lands of suitable areas will go to the really deserving.

5. A simple method of land acquisition has become imperative to legitimize the tenure of some three million landless agricultural workers and landless families now occupying or “squatting” on public agricultural production and economic development.

SECTION 5:The state, subject to the provisions of this Constitutions and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social and cultural well-being.The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

Protection of rights of indigenous cultural communities to their ancestral lands Communal ownership of lands Applicability of indigenous customary laws.

Ancestral domain embraces all lands located within and generally belong to what is called a “ cultural region” including lands w/c are not yet strictly occupied.

Ancestral land refers to be the occupied portions of the ancestral domain.

SECTION 6:The use of property bears a social function and all economic agents shall contribute to the common good. Individual and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish and operate economic enterprises subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.Right to own, establish and operate economic enterprises1. Many economic systems2. Free enterprise system – “free private enterprise”

persons can own and operate business enterprises risking their own resources and thereby taking the profits or the losses in consequence.

3. Intervention by the State4. Regulated capitalism

SECTION 7:Save in cases of hereditary successions, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Acquisition of private lands.Private lands- are lands of private ownership.

They include those owned by private individuals, corporations, or associations and those owned by the State and municipal corporations which are not intended for public use, or for some public service, or for development of the national wealth.

Private lands may be transferred or conveyed to the following:

1. Filipino Citizens2. Corporations and

associations at least 60% of the capital of which is owned by Filipino citizens.

3. Aliens but not only in cases of hereditary succession.

4. Natural-born Filipino citizens who have lost their Philippine citizenship subject to limitations provided by law.

CONSEQUENCE OF VIOLATION OF PROHIBITION.

RESTORATION OF THE STATUS QUO. A SALE OF LAND IN VIOLATION OF THE CONSTITUTIONAL PROHIBITION AGAINST THE TRANSFER OF LANDS TO ALIENS IS VOID. IN OTHERS WORDS, THE SELLER CAN RECOVER THE LAND FROM THE BUYER (ALIEN) WHO HAS RIGHT TO BE REIMBURSED WITH THE AMOUNT OF THE PURCHASE PRICE.

WHERE VIOLATION IS DISGUISED. THE PUBLIC POLICY TO CONSERVE LANDS FOR THE FILIPINOS WOULD BE DEFEATED AND ITS CONTINUED VIOLATION SANCTIONED, IF THE COURTS WOULD NOT ORDER THE RESTORATION OF THE PROPERTY.

SECTION 8:Notwithstanding the provisions of Section 7 of this Article, a natural-born citizen of the Philippines who has lost his Philippines citizenship may be a transferee of private lands, subject to limitations provided by law.

RIGHT OF NATURAL- BORN CITIZENS WHO HAVE LOST THEIR CITIZENSHIP TO ACQUIRE PRIVATE LANDS.

PERMITS NATURAL-BORN FILIPINOS WHO HAVE LOST THEIR CITIZENSHIP TO BE A TRANSFEREE OF PRIVATE LANDS (NOT LANDS OF PUBLIC DOMAIN).

The reasons for Section 8 are better explained by the “whereas clauses” of Resolution No.1 of the former Batasang Pambansa proposing a 1981 amendment to 1973 Constitution, to wit:

Whereas, many natural-born citizens of the Philippines have migrated to foreign countries, particularly to Hawaii and other states of the United States of America, where they eventually acquired the citizenship of the countries to which they migrated as a consequence, lost their Philippine citizenship;

Whereas, in spite of their ne citizenship these former Filipino citizens continue to maintain their filial links with their relatives in the Philippines and an identity with ou people;

Whereas, thousands of these former Filipino natural-born citizens expressed a desire to return to the Philippines and reside here permanently so as to be able to spend the remaining years of their lives in the land of their birth and contribute in whatever way they can towards the development of our country and the well-being of our people;

Whereas, it is in the national interest to give encouragement to this beautiful sentiment of our blood-brothers and to make it possible for them to bring to fruition their expressed desire;

Whereas, it would be necessary to amend the Constitution so as to enable these natural-born citizens of the Philippines to own the land on which they reside.

SECTION 9:

THE CONGRESS MAY ESTABLISH AN INDEPENDENT ECONOMIC AND PLANNING AGENCY HEADED BY THE PRESIDENT, WHICH SHALL, AFTER CONSULTATIONS WITH THE APPROPRIATE PUBLIC AGENCIES, VARIOUS PRIVATE SECTORS, AND LOCAL GOVERNMENT UNITS, RECOMMENDED TO CONGRESS, AND IMPLEMENT CONTINUING INTEGRATED AND COORDINATED PROGRAMS AND POLICIES FOR NATIONAL DEVELOPMENT.

UNTIL THE CONGRESS PROVIDES OTHERWISE, THE NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY SHALL FUNCTION AS THE INDEPENDENT PLANNING AGENCY OF THE GOVERNMENT.

Independent Economic and Planning agency headed by the President to be established.

(1)NEED FOR A CENTRAL ECONOMIC PLANNING BODY. Economic planning is an essential part of development policy. It may cover the whole economy, or only certain sectors of it, or particular region of a country.

(2)FEATURES AND FUNCTIONS. The following are the features and functions of the economic and planning agency which Congress is mandated to establish:

(a) It is independent;(b) It is a central body for economic planning and policy;(c) It is headed by the President, making it the highest

economic policy planning organ.(d) It shall prepare programs and policies for national

development;(e) It shall prepare such programs and policies for approval

of Congress;(f) It shall prepare, recommend, and implement “continuing,

integrated, and coordinated programs and policies”:1) continuing because it is a continuous process of

preparation, review and implementation, evaluation and follow-up;

2) Integrated because it has to present a unified set of policies;

3) coordinated because cooperation and interaction among all is essential to success any development plan.

(3)National Economic and Development Authority (NEDA). This body shall function as the independent planning agency of the government.

SECTION 10:

The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens , or such higher percentage as Congress may prescribe, certain areas of investments. The congress shall enact measures hat will encourage the formation and operation of enterprise whose capital is wholly-owned by Filipino.

Filipinization of certain areas of investments.Congress shall reserve citizens of the Philippines or

to corporations or associations at least 60% of whose capital is owned by such citizens or such higher percentage as Congress may prescribe (up to 100%), certain traditional areas of investments, upon certain conditions:(1)There is a recommendation by the economic and

planning agency ; and(2)The national interest so dictates.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

Existing laws limiting certain activities to Filipino citizens or corporations.

Under the present laws, activities in the following, among others, are limited to Filipino citizens or corporations wholly- owned by Filipino citizens:(1)Operation of rural banks:(2)Engaging in the retail of trade business;(3)Operations of registered overseas shipping;(4)Engaging in the rice and corn industry;(5)Engaging in tax-free cottage industries;(6)Contracts for the supply of materials, equipment, goods

and commodities for the government; and(7)Operations of atomics energy facilities.Regulation of foreign investments(1)Sources of investment.(2)Kinds of investment.(3)Benefits and negative aspects of foreign direct investments.(4)Need for foreign investment in the Philippines.(5)Foreign investment policy.(6)Objective of regulation.

SECTION 11:

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate, or authorization be exclusive in character for a longer period than fifty years. Neither shall any such franchise or right to be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities, by the general public. The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.

Meaning of franchise. FRANCHISE- includes any special privilege or right conferred by the State on persons or corporations. It may mean either the:

(1)Corporate or primary franchise, which is the right granted to a group of individuals to exist and act as a corporation;

(2)Secondary or special franchise, which is the right granted to an individual, or to a corporation after its incorporation, to exercise certain power and privileges.

Meaning of public Utility.A public utility has been described as a business

organization which regularly supplies the public with some service, as electricity, gas, water, transportation, or telephone or telegraph service.

Public utilities are also known as public service companies. Public market are public services or utilities under the constitutional provision.

Limitations upon grant of franchise, etc.The limitations upon the grant of any franchise,

certificate or any other form of authorization for the operation of a public utility are:

(1) The guarantee must be a citizen of the Philippines or a corporation or association (a) organized under the laws of the Philippines (b) at least 60% of the capital of which is owned by citizens of the Philippines. This means that 40% of said capital may be owned by aliens:

(2) Such franchise, certificate, or authorization shall not be exclusive in character;

(3) Such franchise, etc. shall not be for a longer period of fifty (50) years;

(4) Such franchise (although it is in the nature of a contract between the government and the grantee) or right shall be subject to amendment, alteration, or repeal by Congress when the common good so requires.

The provision is a recognition of the very strategic position of public utilities both in our country’s economy and security.

Foreign participation in any public utility.

(1)Investment. Foreigners may invest in public utility enterprises but to the extent of not more than 40% of the capital of the same. The entry of foreign capital is allowed because the establishment and operation of public utilities may require the investment of a big amount of capital which Filipino citizens may not afford.

(2)Governing body and management. Foreigners can even be elected to the governing body of any public utility enterprises but their number shall be limited to their proportionate share in the capital thereof.

SECTION 12:The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive. Adoption of “Filipino First” policy.This is also provided in the above section:(1)Duty of the State. The State shall:

(a) promote the preferential use of Filipino labor, domestic materials and locally produced goods; and

(b) adopt measures that help make them competitive.(2) Aim of Policy. The constitutional policy is to give preference or dominance to Filipinos in their own country especially in the grant of rights, privileges and concessions involving our national economy and patrimony, and make them competitive as against foreigners in both domestic and foreign competition.(3) Duty of buying public. Many Philippine-made products are at part with the world’s best. It is the duty of every self-respecting Filipino citizen to buy the products of his own countrymen.

SECTION 13:The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangement of exchange on the basis of equality and reciprocity. Promotion of trade policy that serves the general welfare.(1)Trade policy as an implement to achieve specific goals. A

trade policy is a policy affecting exports and imports and domestic commerce formulated to achieve specific goals. Thus:

(a) High tariffs or duties, import quotas or even total import ban of certain commodities may be imposed to protect local industries producing similar articles;

(b) Tariffs are made relatively low so as not to discourage imports and thus raise more revenues;

(c) Import controls are relaxed when they tend to encourage production of goods that are high-priced and low quality;

(d) A trade policy may be designed to promote export industries to earn more foreign exchange or the domestic-oriented industries to replace imports: and

(e) The government may impose dumping duty on imported articles sold in the Philippines at less than their fair market value or countervailing duty on such articles.

SECTION 14:The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit.

The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.Promotion of national talent pool of Filipinos.

Human resources- people- are the most critical sources of economic growth. They are the active factors of development that utilize through their labor the passive factors (land and capital) to produce goods and services needed by a growing economy. They determine the pace and quality of economic, social and political development. A country is only as good as its human resources.

(2) Paramount objective of trade policy. The Constitution makes it clear that the trade policy which it requires the State to promote must be one that serves the general welfare.

(3) Benefits from international trade. International trade benefits a country by allowing it to buy from other countries, goods it lacks, or cannot produce better, or can produce only at higher cost, and sell surplus goods, or those it can produce better and cheaper.

(4) Exchange rates of different currencies. However, since countries used different currencies, international trade necessarily involves exchanging one into the other at the prevailing rate of exchange.

(5) Special problems arsing from international trade. Special problems usually arise from international economic relations.

Regulation of Technology transfer.1). Benefits from technology transfer. – It is safe to say that underdeveloped economies are so because they continue to depend on traditional technology particularly in agriculture. The growth gap between developed and underdeveloped countries is generally wide as the technological gap.2). Safeguard against import of inappropriate foreign technology. – The transfer or appropriation of technology, however, is not necessarily the solution. There must be safeguards against import of obsolete foreign technologies particularly where they involve the payment of high charges such as royalties and license fees.

Practice of all professions limited to FilipinosProfession - has been defined as a calling which requires the passing of an appropriate government or bar examination, such as the practice law, medicine, public accountancy, engineering, etc. • Nature of right to practice – The practice of profession involves

public interest and is open only to persons who have undergone the necessary academic preparation and passed the appropriate government examination and who possesses such other special qualification prescribed by law.

• Exercise of privilege by aliens. – The Constitution limits the practice of all professions in the Philippines to Filipino citizens. However, Congress may provide otherwise in certain cases, pursuant to the treaty, or on grounds of reciprocity.

Agency to promote viability and growth of cooperatives to be created.Cooperative is a type of business unit through which individual members cooperate in providing specific types of services of mutual benefit to the membership.Cooperatives operate under certain basic principles. They may be classified as consumers, producers, marketing, credit, or service cooperatives.

With the mandate to create an agency to promote their viability and growth, the new Constitution now gives proper recognition to the important role cooperatives can play, “instrument for social justice and economic development”.Cooperative can serve as a vehicle for attaining a more equitable distribution of wealth by increasing the income and purchasing power of the low- income sector of the population and providing needed services not only for their members, but also for the community in general.

SECTION 15:The Congress shall create an energy to promote the viability and growth of cooperatives as instrument for social justice and economic development.

SECTION 16:The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common and subject to the test of economic viability.Formation, organization, and regulation of corporations.

Under this provision, Congress is prohibited from passing a special law or charter for the formation, organization, or regulation of specific private corporations. These matters are to be provided for by general law that is a law equally applicable to all private corporations. The purpose then is to prevent discriminatory practices wherein special privileges are granted to a few without giving others the right to obtain those privileges or the same conditions. The exception relates to private corporations that are owned or controlled by the government.

Creation of government-owned or controlled corporations. These corporations may be created or established by a special charter or law but only “in the interests of the common good and subject to the test of economic viability”.

“Economic viability” means that the government corporation will have the capability to make profits and will not have to depend on budgetary appropriations or special assistance from the government.The limitation that the creation must be in the interest of the common good is recognition that the private sector should be the ”engine” of national economic progress while the government should engage in business only when it is absolutely necessary.

SECTION 17:In times of national emergency, when the public interest so requires, the State may, during the emergency and under reasonable terms prescribed by it, the temporarily take over or direct the operation of any privately utility or business affected with public interest.Temporary take-over or direction of private business by the government.Under this provision, the State( Government) in times of national emergency when the public interest so requires, may either temporarily take over the operation of any privately-owned public utility or business affected with public interest, or merely direct the operation of said public utility or business. In the first case, the government virtually becomes owner of the utility or business. In either case, the temporary take over or direction by the government must not last beyond the period of the public emergency and it must be under reasonable terms prescribed by it. The President may declare a state of national emergency and exercise the powers granted by Section 17 without need of an emergency powers law enacted by Congress as provided under Section 23(2) of Article VI.

SECTION 18:The State may, in the interest of national welfare or defence, establish and operate vitas industries and, upon payment of just compensation, transfer to public ownership utilities and other private enterprises to be operated by the Government.Government ownership of business.

1) Under this provisions the state may do two(2) things.2) Establish and operate vital industries(means of

transportation and communication); and3) Transfer to public ownership, utilities and other private

enterprises, upon payment of just compensation, to be operated by the government.

4) The government is allowed to take action in this respect not only when national defence requires it but in all cases where the national welfare makes it imperative as when there is economic monopoly or subjugation by aliens prejudicial to public interest in the ownership and operation of certain vital industries.

SECTION 19:The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shall be allowed.Meaning of monopolyThere is monopoly where a single seller or group of sellers acting in concert actually controls or posses the power to control market prices. The bigness of a company is not by itself indicative of a monopoly.

Regulation or prohibition of private monopoliesEven without the above prohibitions, the State may still

regulate or prohibit private monopolies when the public interest do requires in the exercise of its police power. With these provisions, however, a law prohibiting private monopolies cannot be attacked as unconstitutional for being an unreasonable interference with the right to liberty or property that operate in restraint of trade (infra.) do away with free and open competition and, therefore, are inimical to the interest of consuming public.

The use of the word “regulate” in the Constitution indicates that some monopolies, properly regulated, are in public interest.

Meaning of restraint of trade The phrase restraint of trade is used (1) in reference to combinations acts, or practices which interfere with the normal production and supply of commodities by the suppression of competition there in or by other means and (2) also with reference to contractual restriction upon the right of a person to engage in trade, business or profession.Meaning of competition

Competition implies a struggle for advantage between two or more forces each possessing, in substantially similar, if not identical, degree, certain characteristics essential to the business sought. It means an independent endeavour of two or more persons to obtain the business patronage.Meaning of unfair competition

The simulation by one person of the name, symbols, or devices employed by a business rival so as to induce the purchase of his goods under a false impression as to their origin, or ownership.Our Civil Code provides that “unfair competition in agricultural, commercial or industrial enterprises or in labor, through the use of force, intimidation, deceit, machination or any other unjust, oppressive or high handed method shall give rise to the right of action by the person who thereby suffers the damage”.

Combinations in restraint of trade and unfair competition prohibited.• The Constitution altogether prohibits

combinations in restraint of trade and unfair competition. (Sec.19). Democracy becomes a veritable mockery if any person or group of persons by any unjust or high-handed method may deprive others of a fair chance to engage in business or earn a living. The provision seeks to preserve competition in a wholesome and free atmosphere.

• Note that what the Constitution prohibits is unfair competition. So long as fair or legitimate means are used, competition is proper.

SECTION 20:The Congress Shall establish an independent central monetary authority, the members of whose governing board must be natural born Filipino citizens, of known probity, integrity, and patriotism, the majority of whom shall come from the private sector. They shall also be subject to such other qualifications and disabilities as may be prescribed by law. The authority shall provide policy direction in the areas of money, banking, and credit. It shall have supervision over the operations of banks and exercise such regulatory powers as may be provided by law over the operations of finance companies and other institution performing similar functions.

Until the Congress otherwise provides, the Central Bank of the Philippines, operating under existing laws, shall function as the central monetary authority.

Central monetary authority established.This Provisions direct Congress to establish an independent

central monetary authority with the powers and functions mentioned therein. The Central bank of the Philippines created by R.A No. 265 ha been constituted as the central monetary authority pursuant to the 1973 Constitution.1).Responsibilities and objectives – The importance of a central monetary authority may be seen by looking at the responsibilities and objectives of Bangko Sentral ng Pilipinas (Central bank of the Philippines) as provided by the new Central Bank Act:

• To provide policy directions in the areas of money, banking, and credit;• To supervise ad regulate the operation of banks, finance

companies, and non- bank financial institutions;• To maintain price conducive to a balanced and sustainable

growth of the economy; and• To promote and maintain stability and convertibility of peso in

other currencies.2). Qualification of members of governing board. – The members of the governing board of the central monetary authority must be natural born Filipinos because of the nature of their functions. The requirement that the members must be a persons of known probity, integrity and patriotism and that the majority of the members shall come from the private sector is designed to promote the independence of the central monetary authority.

SECTION 21:Foreign loans may only be incurred in accordance with law and regulation of the monetary authority. Information foreign loans obtained or guaranteed by the Government shall be made available to the public. Section 21 seeks to prevent, once and for all, the injudicious contracting of foreign loans in the past on the sole initiative of the President even against the advice of the Monetary Board of the Central Bank. Furthermore, more, the contract or guarantee must be with the prior concurrence of the Monetary Board. Bu the congressional approval is not required.As it is the people who will ultimately shoulder the payment of the country’s indebtedness, the Constitution also requires that the information on foreign loans obtained or guaranteed by the government shall be available to the public.

SECTION 22:Acts which circumvent or negate any of the Provisions of this article shall be considered inimical to the national interest and subject to criminal and civil sanctions, as may be provided by law. Acts which circumvent or negate Article XII.

Section 22 declares that:1) Acts which circumvent or negate any of the provisions of article XII are inimical to the national interest: and2) They shall be subject to civil and criminal sanctions as may be provided by law.• This provisions basically prohibits foreign use of Filipino dummies

and seeks to prevent the enjoyment of a right, franchise, privilege, or property reserved for Filipinos by those who are not qualified. It is in response to the revelations of abundant violations of constitutional provisions reserving to Filipinos and Filipino Controlled corporations certain areas of investment should be severe enough as to discourage employment of dummies by aliens

• The criminal penalties should be severe as to discourage employment of dummies by aliens.